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Keane (FRAC) Inks Deal to Buy RockPile Energy for $284.5M

Zacks Equity Research

Integral well completion services provider Keane Group, Inc. FRAC recently announced that it has entered into an agreement to acquire RockPile Energy Services, LLC for $284.5 million. Keane expects the deal to be closed by Jul 31, subject to regulatory approval.

Investors should know that Houston-based private equity firm White Deer Energy is the current owner of RockPile Energy.

Denver-based RockPile Energy provides high-quality completion services to various upstream companies and primarily operates in the Bakken and Permian basins.

About the Deal

Keane is expected to pay $135 million in cash and 8.7 million shares of its common stocks for the transaction. The deal also incorporates contingent consideration of up to $20 million in case Keane’s stock price falls below $19 per unit.

The company had previously ordered hydraulic fracturing machinery from RockPile Energy, for which $26.5 million will be paid to the acquiree from Keane's capital expenditures. Keane will reimburse $9 million in deposits at closing, which RockPile Energy previously paid during building the hydraulic machinery.

How will Keane Benefit?

The buyout will make Keane one of the largest and extremely advanced pressure pumping fleet owners in the country. The company's pressure pumping fleet size will increase approximately 26% after the acquisition. Keane will have around 1.2 million hydraulic fracturing horsepower fleet placed strategically across the most prolific shale basins in the U.S.

About the Company

Keane Group mainly focuses on complex and technically demanding completion solutions. The company’s primary service offerings include horizontal and vertical fracturing, wireline perforation and logging and engineered solutions as well as other value-added service offerings. It is headquartered in Houston, TX.

Price Performance

Keane operates in the Zacks categorized Oil and Gas - United States - Integrated industry. The company’s shares have gained 2.45% over the last one month compared with the broader sector’s decrease of 2.72%.

Zacks Rank and Stocks to Consider

Keane presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in oil and energy sector include SunCoke Energy, Inc. SXC, Delek US Holdings, Inc. DK and Canadian Natural Resources Limited CNQ. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy’s sales for the current quarter are expected to increase 18.86% year over year. The company had a positive earnings surprise of 120% in the first quarter of 2017.

Delek US Holdings’ sales for the current year are expected to increase 73.24% year over year. The company recorded a positive average earnings surprise of 60.68% in the last four quarters.

Canadian Natural Resources’ sales for the current quarter are expected to increase 24.11% year over year. The company recorded a positive earnings surprise of 30.77% in the first quarter of 2017.

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